India's Central Bank Pauses Navi's Lending

India's Reserve Bank has temporarily halted new loans from several non-bank lenders, including Sachin Bansal's startup Navi Finserv. The decision, effective from October 21, was driven by high interest rates and regulatory violations. These breaches involved incorrect loan pricing, inaccurate income assessment, and misclassification of assets. The Reserve Bank has been warning about irresponsible lending practices for some time now. Although affected companies can keep serving existing customers, they must fix issues to resume new lending. DMI Finance, another lender under the order, partners with big names like Google, Samsung, and Airtel to offer loans. Navi, a Bengaluru-based startup, was previously denied a banking license by the central bank. Amid talks with investors for its first external funding, Navi now faces this hurdle. Navi has stated its commitment to high compliance, customer service, and transparency. They are reviewing the central bank's directions and plan to address concerns promptly.